The path-goal theory of leadership was proposed by Robert House in 1971.

This theory states that the role of a leader is to provide guidance according to the needs of the worker and work environment for attaining the goals.

This theory suggests that one style of leadership cannot perform effectively in different situations. Hence, the leadership style should be changed according to the situation. In order to make the leadership style well-suited to the situation, the leadership style should be modified according to 1) the needs of the worker, and 2) the work-environment.

If the leader remains flexible and modifies his behaviour according to the needs of workers and work-environment, it means that the leader has adopted the right path, and this will ensure the attainment of goals effectively and easily. It is why this theory is called the path-goal theory of leadership – the path that leads to goals achievement.

Therefore, this theory discusses the needs of workers (or employee characteristics) and work-environment in detail, and based on this discussion, it provides four types of leadership styles that suit different situations, as follows.

The employee characteristics show what are the needs and requirements of the employees. Since the characteristics of employees can vary, their needs and requirements also vary. For instance, the employees may lack confidence, and thus, there is a need to build the confidence of the employee.

Hence, the leader should first try to understand the characteristics of the employees and then, address their needs accordingly. For instance, the employees may be good at carrying out the tasks, but they may lack motivation. In such a case, if the leader gives straight directions to engage employees in various activities, it may not work well. The leader should first motivate the employees by providing them support to encourage them, advising them in relation to their goals, introducing some rewards for better performance and so on. Similarly, if the employees lack basic skills and expertise to perform activities efficiently, the leader should enhance their required skills and expertise by providing relevant training and educating them on how to perform these activities.

If the leader considers the characteristics and needs of employees; and thus, he moulds his leadership style accordingly by addressing the concerns of their employees, it assures attainment of the goals easily and effectively.

Work-environment includes assigning tasks to the employees, relationships among the employees, rules and regulations for conducting the tasks and so on. There can be a number of such considerations, in relationship to the work-environment, which the leader must take into account to achieve the goals. The important one is rules and regulations for conducting the tasks which are made for bringing harmony in the activities of the team to ensure smooth functioning of the employees. However, the same set of rules and regulations cannot be applied to every type of work-environment or situation. This means that the leader should take the work-environment into account in order to make practicable rules and regulations for carrying our tasks.

In addition to other functions, these rules and regulations also define that who will do which task. This means the leaders should understand which type of task-assignment (whom to be assigned which work) will perform well in a specific work-environment. Generally, task-assignment depends on the competence of employees to perform an activity, however, based on changing work-environment, there can also be other factors that should be considered for proper task assignment.

Another important aspect of work-environment is the relationship among the employees. Conflicts among the employees can generally be seen in varying degrees in different work-environment. It affects the overall outcomes of teamwork. Therefore, depending on the work-environment, the leaders should use different tactics to resolve conflict among employees to provide a peaceful and healthy environment for task accomplishment.

Based on the needs of workers and the work-environment, a number of leadership styles can be adopted. This theory provides four types of leadership along with the conditions where they work effectively. These four types of leadership are as follows.

In this type of leadership, the primary role of the leader is to direct the workers to carry out tasks. In other words, the leader plays a role like an instructor who gives instructions to the worker. The leader clearly explains the basic rules and regulations to the workers and expect them to work accordingly. The leader also gives instructions to the worker on regular basis to ensure that all tasks are carried out according to the rules and regulations. 

This style of leadership works best in a situation where the workers are well-versed and expert in their tasks and are highly motivated towards task accomplishment; and thus, they do not require any extra support (e.g., motivation) but all they require is instructions to keep them on a proper track. However, this style may not perform well in many situations where the employees generally require a great deal of external support.

In this type, the leader expresses concern for the workers. This type of leadership is based on warm and mutual trust. The leader provides support to the workers and tries to address their needs. The provided support can be in the form of emotional support (e.g., care, satisfaction, and encouragement) to raise the confidence levels of the worker or in the form of guidance to enhance the skills of the worker.   

This type of leadership style works best in situations where the employees lack motivation or require general guidance. As noted earlier, sometimes the workers are good at work but due to distressing work-environment or any personal reason, they become demotivated and thus, they should be provided support (e.g., advice and encouragement). Similarly, in some situations, particularly where people have joined together (voluntarily) to engage in some social welfare work (e.g., a community issue), they are highly motivated, but they may lack the skills to accomplish the tasks. Therefore, all they need is guidance to enhance their skills.

In this type, the leader guides the workers according to the nature of goals and routes to the achievement of these goals. The leadership style is oriented towards the achievement of goals.

The leader sees that what are the goal, and thus, decides accordingly to adopt a specific path to goal accomplishment in order to maximize the result. Choosing the best path involves the assessment of various factors (e.g., intended goals, available financial and human resources, costs) and planning such as deciding work schedules and techniques to minimize cost and maximize output. Taking such consideration into account, the leader controls and guides the workers accordingly.

In this type, the leader does not act overly authoritative over the worker. He has a democratic approach to decision making power. In some other types of leadership, the decisions may sometimes be made unilaterally by the leader who does not include the opinions of workers in the decision-making process. However, in the participative leadership style, the leaders believe that the worker should be active participants in the decision-making process. Therefore, the leader value and respect the opinions of the workers and include their inputs in the decision-making process.

In this type of leadership, the workers view themselves as active participants (rather than passive recipients of orders from the leader) and thus feels motivated and express their sincere interest in work. However, this type of leadership may not perform well, if the workers are good at work but have no expertise or knowledge to provide useful inputs to the decision-making process.